This paper provides causal evidence on the effect of in-utero exposure to air pollution on noncognitive ability in childhood. I use the meteorological phenomenon of thermal inversions to address the endogeneity in exposure to particulate matter and data from a representative household survey in Germany to measure noncognitive abilities. I find that an increase in particulate matter concentration by 1 unit during the prenatal period raises neuroticism at age 5-10 by 7% of a standard deviation. This implies that affected children are less emotionally stable, more fearful and less self-confident. Back of the envelope computations indicate that a one standard deviation increase in particulate matter reduces adult earnings by 0.24%-0.29% just through its impact on neuroticism.
Keywords: air pollution, human capital, non-cognitive skills, child development